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WorksheetsAudit AKSK 1
Total questions: 22
Worksheet time: 11mins
Which of the following best describes why an independent auditor is asked to express
an opinion on the fair presentation of financial statements?
It is difficult to prepare financial statements that fairly present a company’s financial
position, operations, and cash flows without the expertise of an independent auditor.
It is management’s responsibility to seek available independent aid in the appraisal
of the financial information shown in its financial statements.
The opinion of an independent party is needed because a company may not be
objective with respect to its own financial statements.
It is a customary courtesy that all stockholders of a company receive an independent report on management’s stewardship of the affairs of the business.
Which of the following professional services is an attestation engagement?
A consulting service engagement to provide computer-processing advice to a client
An engagement to report on compliance with statutory requirements
An income tax engagement to prepare company's tax returns
The preparation of financial statements from a client’s financial records
Which of the following attributes is likely to be unique to the audit work of CPAs as compared to the work performed by practitioners of other professions?
Independence
Competence
having professional scepticism
Complete and disciplined body of knowledge (BOK)
Operational audits generally have been conducted by internal auditors and governmental audit agencies but may be performed by certified public accountants. A primary purpose of an operational audit is to provide ...
a means of assurance that internal accounting controls are functioning as planned.
a measure of management performance in meeting organizational goals.
the results of internal examinations of financial and accounting matters to a company’s top-level management.
aid to the independent auditor, who is conducting the audit of the financial statements.
Which of the following best describes the operational audit?
It concentrates on seeking aspects of operations in which waste could be reduced by the introduction of controls.
It focuses on verifying the fair presentation of a company’s results of operations.
It concentrates on implementing financial and accounting control in a newly organized company.
It requires the constant review by internal auditors of the administrative controls as they relate to the operations of the company.
Compliance auditing even often extends beyond audits; leading to the expression of opinions on the fairness of financial presentation. It also includes audits of efficiency, economy, and effectiveness of operation, as well as ....
completeness of consideration to the intended regulation.
adherence to specific rules or procedures.
monitoring and evaluation of regulation.
internal controls toward laws and regulations.
Independent auditing can best be described as ....
a branch of accounting.
a discipline that attests to the results of accounting and other functional operations and data.
a professional activity that measures and communicates financial and business
data.
a regulatory function that prevents the issuance of improper financial information.
International Standards on Auditing are established by the ....
International Auditing Standards Board.
International Auditing and Assurance Standards Board.
Auditing Standards Board.
International Auditing, Assurance, and Attestation Standards Board.
Which of the following best describes what is meant by "Auditing Standards"?
Acts to be performed by the auditor.
Measures of the quality of the auditor’s performance.
Procedures to be used to gather evidence to support financial statements.
guidance to behave in auditing profession.
A CPA firm is reasonably assured of meeting its responsibility to provide services that conform with professional standards by ....
adhering to generally accepted auditing standards.
having an appropriate system of quality control.
joining professional societies that enforce ethical conduct.
maintaining an attitude of independence in its engagements.
One purpose of establishing quality control policies and procedures for deciding whether to accept a new client is to ....
enable the CPA firm to attest to the reliability of the client.
satisfy the CPA firm’s duty to the public concerning the acceptance of new clients.
provide reasonable assurance that the integrity of the client is considered.
anticipate before performing any field work whether an unqualified opinion can be issued.
The Responsibilities principle underlying AICPA auditing standards includes a requirement that ....
the audit be adequately planned and supervised.
the auditor’s report state whether or not the financial statements conform to generally accepted accounting principles.
professional judgment be exercised by the auditor.
informative disclosures in the financial statements be reasonably adequate.
What is the general character of the responsibilities characterized by the "Performance" principles?
The competence, independence, and professional care of persons performing the audit
Criteria for the content of the auditor’s report on financial statements and related footnote disclosures
The criteria of audit planning and evidence gathering
The need to maintain an independence in mental attitude in all matters pertaining to the audit
One of a CPA firm’s basic objectives is to provide professional services that conform with professional standards. Reasonable assurance of achieving this objective is provided through ...
a system of quality control implemented by CPA firms.
a system of peer review conducted among CPA firms.
continuing professional education performed by all of the CPAs.
compliance with generally accepted reporting standards.
Why should CPAs need to comply with ethical conduct?
It is a matter of regulation.
It is the essence of auditing profession
It is a matter of quality of the audit result.
It is a matter of trust.
The opinion paragraph of a CPA’s report states: “In our opinion, except for the effects of not capitalizing certain lease obligations, as discussed in the preceding paragraph, the financial statements present fairly,” in all material respects, . . . This paragraph expresses a(an)
Unqualified opinion.
Unqualified opinion with explanatory paragraph.
Qualified opinion.
Disclaimer opinion.
What is the meaning of the rule that requires the auditor be independent?
The auditor must be without bias with respect to the client under audit.
The auditor must adopt a critical attitude during the audit.
The auditor’s sole obligation is to third parties.
The auditor may have a direct ownership interest in the client’s business if it is not material.
Which of the following services can be offered to public company audit clients under SEC requirements and the Sarbanes–Oxley Act?
Tax services for executives involved in financial reporting
Internal audit outsourcing
Tax planning not involving tax shelters
Bookkeeping and other accounting services
An auditor strives to achieve independence in appearance to
comply with auditing standards related to audit performance.
become independent in fact.
maintain public confidence in the profession.
maintain an unbiased mental attitude.
In which one of the following situations would a CPA be in violation of the AICPA Code of Professional Conduct in determining the audit fee?
A fee based on the nature of the service rendered and the CPA’s expertise instead of the actual time spent on the engagement.
A fee based on the outcome of a bankruptcy proceeding.
A fee based on whether the CPA’s report on the client’s financial statements
results in the approval of a bank loan.
A fee based on the fee charged by the prior auditor.
The AICPA Code of Professional Conduct states that a CPA shall not disclose any confidential client information obtained in the course of a professional engagement except with the consent of the client.
In which one of the following situations would disclosure by a CPA be in violation of the Code?
Disclosing confidential information to another accountant interested in purchasing the CPA’s practice.
Disclosing confidential information in compliance with a subpoena issued by a
court.
Disclosing confidential information in order to properly discharge the CPA’s responsibilities in accordance with the profession’s standards.
Disclosing confidential information during an AICPA-authorized peer review.
The independent audit is important to readers of financial statements because it
determines the future stewardship of the management of the company whose financial statements are audited.
measures and communicates financial and business data included in financial statements.
involves the objective examination of and reporting on management prepared statements.
reports on the accuracy of all information in the financial statements.
